The Government is set to hand the power to impose a tourism levy to dozens of towns and cities across England.
Prime Minister Andy Burnham has long made clear he supports the idea of giving more powers to regions that want them including the ability to raise their own revenue from tourism.
Many of Labour’s mayors in the North and the Midlands have already said they would implement such a levy.
The policy has faced a backlash from the hospitality sector which claims it would increase the cost of holidays and city breaks and cause job losses.
Tourism levies are commonplace in much of Europe and research suggests there is little evidence that modest charges have much effect on visitor numbers.
Under Sir Keir Starmer’s government, former Chancellor Rachel Reeves appeared apprehensive of bringing in what was billed as a new ‘tax’ by critics.
But Burnham is now set to push ahead with the move, arguing it will raise much-needed cash for tourist hotspots to reinvest in infrastructure and services that will support both local people and visitors.
Here The i Paper looks at which areas could use the levy, and why some will not.
Mayoral authorities will be the first to introduce a ‘tourist tax’
The powers will be introduced via the English Devolution and Community Empowerment Bill which is currently moving through Parliament.
It is expected the first areas to make use of the ‘tourist tax’ will be mayoral authorities and it will not be implemented before 2028 at the earliest.
Makerfield MP Andy Burnham pictured with regional mayors outside Downing Street in London. The move would allow regional mayors to raise their own revenue and spend it as they see fit (Photo: Chris J. Ratcliffe/Getty)There are currently 14 mayors of strategic authorities and those which have already declared support for the move include; Greater London, the West Midlands, Liverpool city region, Greater Manchester, West Yorkshire, South Yorkshire, York and North Yorkshire and the North East.
This would mean cities such as Birmingham, Manchester, Leeds, York, Sheffield and Newcastle could all introduce levies, although it is likely it would also extend beyond these places to the wider region.
The Government says the powers will also be available to places that don’t have a mayor, but do have a ‘foundation strategic authority’ such as Lancashire.
It remains unclear what will happen to other areas, especially given this week’s announcement from Angela Rayner that Labour will have to pause its plans for local government reorganisation because of potential legal challenges.
Cornwall, for example, has shown strong support for a tourism levy but is not currently part of a devolved authority.
During a visit this summer, Burnham said an overnight levy could be a “major game changer” for Cornwall and wanted to start discussions about it “sooner rather than later”.
Burnham has repeatedly stressed his belief in the need for more devolution in England and that he would like to see all areas have more powers held locally.
There are at least six areas – such as Cheshire and Warrington – which have agreed to set up a new mayoral authority but they won’t hold their first elections until next year.
How much will the tourism tax be?
There are broadly three ways to introduce a ‘tourism tax’ ; a flat rate such as £1 to £2 on all overnight visitors, a tiered flat rate that varies by accommodation type, or a percentage based scheme.
The Government has said it will only permit mayors in England to use a percentage based scheme – this means tourists pay a higher amount when staying in an expensive hotel compared to a cheaper bed and breakfast, for example.
Ministers say this will shield “families from disproportionate costs for cheaper holidays.”
The i Paper understands mayors will not be given the option of using a flat fee. The move is likely to come as a surprise to experts who have generally recommended that English cities use a flat fee for a tourism levy.
According to research carried out by influential think-tank Centre for Cities, a £2-per-night levy could raise at least £216m per year across 62 cities analysed, although it would be far more significant for the biggest tourist destinations.
A report published this week by York and North Yorkshire recommended a £1-per-night levy and said this would likely raise £26m per year based on current visitor numbers.
Edinburgh has already introduced a tourist tax to help pay for the festival (Photo: Jeff J Mitchell/Getty Images)In Edinburgh, a tourism levy which is 5 per cent of the accommodation cost is already in place and is expected to raise up to £50m a year.
The city council says it will be spent on infrastructure, housing and events.
In Wales, a tourism levy is due to begin in 2028 will be a tiered-flat rate system – set at £1.30 per person per night for standard accommodations and 75 pence per person per night for campsites and hostels – and will be administered centrally by the Welsh government.
Experts say mayoral authorities in England will have to be careful which scheme they select to ensure it has the support of local businesses and communities.
In York, the mayor David Skaith told The i Paper he wants to make sure all accommodation types are treated fairly and covered by the levy, including shorter-term Airbnb lets.
What are English authorities saying?
The i Paper contacted all 14 mayoral authorities to ask if they are supportive of a tourism tax and if so, how much they expect to charge visitors.
Tory mayors Ben Houchen in Tees Valley and Paul Bristow in Cambridgeshire and Peterborough have said they do not support the policy and have no plans to introduce a tourism tax.
None of the Labour mayors who support a levy have yet committed to a specific charge – saying they will need to work this out following consultation with local businesses and communities.
However, it is understood mayors including Kim McGuiness in the North East and Sadiq Khan in Greater London have said it should not be more than 5 per cent of the cost of the accommodation.
Mayor of London, Sadiq Khan, said: “I strongly welcome the Government giving London the power to introduce an Overnight Visitor Levy. This needs to happen sooner rather than later.”
Tracy Brabin, Mayor of West Yorkshire, added: “By asking people to make a small contribution, like in many other European countries, we can continue to invest in culture, grow our economy and ensure people want to visit for generations to come.”
South Yorkshire’s Mayor Oliver Coppard said: “A Visitor Levy in South Yorkshire would simply bring us into line with many other comparable European Cities including our friends over in Manchester, meaning visitors to South Yorkshire will make a small contribution to the services they use.”
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